Paul
Healy, CEO of PFA, says PFA welcomes recent discussion on build to rent, which is
purpose-built rental accommodation that is institutionally owned and operated. “Build to rent is a missing
link both in terms of providing badly needed affordable housing in our capital
cities, and in providing a way for institutional investors to invest in
residential property in Australia.”

Mr Healy says the PFA agrees with the view that build
to rent will struggle to grow without changes to the tax treatments around such
projects. “Current tax structures appear to be working against the sector. Tax
treatments around Managed Investment Trusts is one issue, along with other
taxes including land tax, GST and stamp duty.”

Mr Healy said institutional investors including
superannuation funds have long expressed an interest to invest in Australian
residential property but it has proved elusive in a market dominated by ‘build
to sell’ property. “The attraction for investors in build to rent is diversification
and accessing a viable long-term defensive income stream.”

Build to rent is the USA’s largest property investment
sector, and is spreading throughout Europe. Mr Healy said the UK’s experience
is worth noting, as it only introduced build to rent housing in 2010 following
political pressure to address accommodation shortages.

Research from Ernst & Young shows Australia faces
similar pressures on rental accommodation with millennials (people aged 16-35)
and Generation Z (16 and under) together comprising approximately 48% of the
population.

EY says millennials comprise the largest proportion of
our population, and Australia will experience a shortage of residential
accommodation as more millennials enter the rental market. “The UK has added close
to 100 thousand dwellings via build-to-rent since 2010, which shows how significant
this asset class could eventually become.”

While build to rent is barely on the radar here, Australian
organisations are participating in build to rent project overseas: The REST
Superannuation Fund reportedly has 3,000 build-to-rent apartments in the USA,
operated by Greystar; and Lendlease is reported to be constructing hundreds of
build to rent apartments in both London and the USA.

“The local property industry would greatly benefit if
these same organisations were also involved in build to rent here in
Australia.”

About
Property Funds Association

The Property Funds Association of Australia is the
peak body representing the Australian unlisted wholesale and retail property
funds sector, currently worth more than $125 billion.

As the professional association for Australian
Financial Services Licensed (AFSL) property fund managers, their advisors,
consultants and representatives, we support and promote investment into
unlisted property trusts, funds and syndicates, and assist members in
developing and operating their businesses.